TaxTMI 
TaxTMI 
1999 (4) TMI 3
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.... the issue involved in these appeals. The contextual facts in Appeal No. 3476 of 1993, depict that the Orissa State Warehousing Corporation being the assessee herein received a sum of Rs. 1,74,383 as interest on fixed deposits for the assessment year 1983-84 and since during the relevant period the assessee has had to pay the total interest of Rs. 1,08,063 to the banks, a sum of Rs. 66,320 was added to the income of the assessee as the Income-tax Officer was of the view that the question of resultant difference of income being Rs. 66,320 cannot be said to be an "income exempt" within the meaning of section 10(29) of the Act. The Commissioner of Income-tax (Appeals), Orissa, in the appeal by the assessee upheld the order of the Income-tax Officer but the Tribunal on further appeal, however, came to a different conclusion to the effect that the income in question was exempt under section 10(29). Subsequently, however, at the instance of the Revenue, the following two questions were referred to the High Court (see [1993] 201 ITR 729), for opinion under section 256(1) of the Act: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding t....
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....annot but be termed to be a part of the functioning of the unit and as such exempt under section 10(29). In this context and having regard to the specific submissions made by Dr. V. Gauri Shankar in support of the appeal it would be convenient to note the abovenoted two statutory provisions for its proper appreciation. Section 16 of the Act of 1962 reads thus : "16. (1) To the warehousing fund shall be credited---- (a) all moneys and other securities transferred to the Central Warehousing Corporation under clause (c) of sub-section (2) of section 43 ; (b) such grants and loans as the Central Government may make for the purposes of the warehousing fund ; and (c) such sums of money as may, from time to time, be realised out of the loans made from the warehousing fund or from interest on loans or dividends on investments made from that fund. (2) The warehousing fund shall be applied---- (a) for advancing loans to State Governments on such terms and conditions as the Central Warehousing Corporation may deem fit for the purpose of enabling them to subscribe to the share capital of State Warehousing Corporations ; (b) for advancing loans and granting subsidies to State Warehousi....
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....or warehouses for storage, processing or facilitating the marketing of commodities." On a plain reading of section 10(29) of the Act as above, it appears that the pre-requisite element for the entitlement as regards the claim for exemption is the income which is derived from letting out of godowns or warehouses for storage, processing or facilitating marketing of commodities and not otherwise. The Legislature has been careful enough to introduce in the section itself, a clarification by using the words "any income derived therefrom", meaning thereby obviously for marketing of commodities by letting out of godowns or warehouses for storage, processing or facilitating the same. If the letting out of godowns or warehouses is for any other purpose, the question of exemption would not arise. In continuation of his submissions, Dr. V. Gauri Shankar contended further that a taxing statute ought not to be interpreted with a narrow and restrictive meaning attached to the words used therein but a liberalised meaning ought to be attributed so as to give full play to the statutory intent. While it is true that in the event of there being any doubt in the matter of interpretation of a fiscal ....
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....any factual support nor any sanction in law. Section 10(29) is categorical in its language and this exemption is applicable only in the circumstances as envisaged under the section as noticed hereinbefore. Needless to say that the word "any income" as appearing in the body of the statute is restrictive in its application by reason of the user of the expressions "derived from". In the event the intent of the Legislature was otherwise, there was no embargo or restraint to use and express in clear and unequivocal language as has been so expressed in section 10(20A) or 10(21) or 10(22B) or 10(20BB) (sic) or 10(27). These statutory provisions go to show that wherever as a matter of fact the Legislature wanted an unrestrictive exemption the same has used "any income" without any restriction so as to make it explicit that the entire income of the assessee would be exempt. The factum of the Corporation being put into funds by itself cannot be termed to be a fund to facilitate the marketing of the commodities, as such the question of the interest income accruing therefrom being exempt from tax as has been held by the Tribunal does not and cannot arise. Mr. C. S. Vaidyanathan, Addl. Solicit....
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....me from the letting of godowns for the three purposes mentioned in section 10(29) of the Act." Be it noted that the Tribunal in these civil appeals (4042-4048 of 1994) has interpreted the words "facilitating the marketing of the commodities" as one integrated activity since the assessee derives its income from the following three sources : (I) from letting out of warehouses (II) interest ; (III) from any agricultural produce on behalf of the Food Corporation of India and the State Government. The Tribunal as a matter of fact did accept the submissions on behalf of the assessee that the activity is single, indivisible and integrated and that all the activities are aimed at facilitating the marketing of the goods. The Tribunal held : "...that the activity of the assessee is an integrated one and that the entire activity is aimed at facilitating the marketing of all the goods. The assessee owns warehouses where the agricultural produce is stored. For storage of food grains, the assessee constructs new warehouses also. Maintenance of the warehouses is also done by the assessee. Procurement of food grain was done by the assessee at the instance of the State Government and the FC....
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....poration was deposited and the interest was earned. The question arose whether such interest income qualifies for exemption under section 10(29). The Allahabad Bench 'A' answered the said question in the affirmative and in favour of the assessee. Following the said decision dated July 31, 1976, pages 1 to 5 of the paper book, we hold that the assessee is entitled to claim exemption in respect of interest income amounting to Rs. 11,41,350.25. Then, we take up the supervision charges, fumigation service charges and miscellaneous income amounting to Rs. 23,790.67, Rs. 6,538.85 and Rs. 48,253.49, respectively, for consideration. The assessee having carried on the single and indivisible activity, we hold that these items qualify for exemption under section 10(29) as they are fully covered by the expression 'facilitating the marketing of commodities', as occurred under section 10(29)." In the reference, however, the High Court observed "The income which is exempt under this clause must be derived from the 'letting of godowns, for facilitating the marketing of commodities. The words 'facilitating the marketing of commodities' cannot be considered independently and, therefore, the exemp....
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....houses for facilitating the marketing of commodities." Dr. D. Pal, the learned senior advocate, appearing in support of these civil appeals, relied strongly on the decision of this court in the case of CIT v. South Arcot district Co-operative Marketing Society Ltd. [1989] 176 ITR 117. Dr. Pal contended that this exemption under section 10(29) is for the purpose of developing the economy so as to achieve social upliftment considering the area in question and since law courts exist for the society, the effort of the law court ought always to be to give the widest possible interpretation so that the society would benefit and exemption be made available to achieve the intent and purposes for which the law makers introduced the same in the statute book. Before proceeding further in the matter, it would be convenient, however, to note the observations in the last noted decision in CIT v. South Arcot District Co-operative Marketing Society Ltd. [1989] 176 ITR 117 (SC) wherein this court observed : "We have considered the matter carefully and to our mind, it seems clear that the Appellate Tribunal and the High Court are right in the view adopted by them. As was observed by the Gujarat H....
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....h, however, has not seen the light of the day in the instant matter under consideration and it is only by reason of the substance of the agreement that this court came to the conclusion that the assessee is entitled to exemption claimed by it. With greatest of deference, the decision of this court in CIT v. South Arcot District Co-operative Marketing Society Ltd. [1989] 176 ITR 117 cannot be said to have expressed any independent view apart from reliance on the decision of the Gujarat High Court in CIT v. Ahmedabad Maskati Cloth Dealers Co-operative Warehouses Society Ltd. [1986] 162 ITR 142. In any event by reason of the factual situation, the decision is clearly distinguishable and we are thus unable to record our concurrence with the submission of Dr. Pal that the same is a clear authority in favour of the assessee in the matter of grant of exemption under section 10(29) of the Act of 1961. It was next contended that as a matter of fact, the Tribunal has arrived at a clear finding of fact and as such this court in exercise of jurisdiction under article 136 of the Constitution ought not to question the same and in the event, however, the court feels it expedient by reason of the ....
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....ehousing Corporation v. ITO [1974] 94 ITR 129. We, however, are not in a position to obtain support in any form whatsoever by reason of the fact that the said matter pertains to the issue as to whether the assessee was an authority within the meaning of section 10(29) of the Act and the High Court's judgment pertains to the same. This decision was, however, subject to scrutiny before this court as well and while it is true that there is concurrence of views but the same was, however, by reason of the factual status and not by reason of any interpretation of law as such, as would be evident from the observations in Union of India v. U. P. State Warehousing Corporation [1991] 187 ITR 54 ; Suppl. 2 SCC 730 as below: "The third test with regard to the exemptable income being in respect of letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities presents no difficulty because it stands undisputed that the income derived by the assessee was from letting of godowns or warehouses." In view of the observations of this court as regards the undisputed facts, the question of drawing any inspiration or obtaining support from the decision does not ....
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.... commodities.' Such a provision would be found in clauses (20A), (21) and (22) of section 10 of the Act. A perusal of these clauses would show that only such income as is derived from a particular source is exempted by clause (29) of section 10 of the Act. Therefore, to claim exemption, it must be proved that the income derived by an authority constituted for the marketing of commodities is income which is derived from the letting of godowns or warehouses for the purposes specified in section 10(29), which are storage, processing or facilitating the marketing of commodities. If the letting of godowns or warehouses is for any other purpose, or if income is derived from any other source, then such income is not exempt under that clause." Further reliance was placed on the decision of this court in the case of CIT v. P. J. Chemicals [1994] 210 ITR 830. In our view, however, reliance thereon is totally misplaced and the same has no relevance whatsoever. The decision of the Allahabad High Court in the case of CIT v. U. P. State Warehousing Corporation [1992] 195 ITR 273 in a similar vein also does not advance the case of the assessee any further, as such we need not dilate much on thi....
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....statute. It must, since, its language is plain and unambiguous, be enforced, and your Lordships' House sitting judicially is not concerned with the question whether the policy it embodies is wise or unwise, or whether it leads to consequences just or unjust, beneficial or mischievous." The oft-quoted observations of Rowlatt J. in the case of Cape Brandy Syndicate v. IRC [1921] 1 KB 64 ought also to be noticed at this juncture. The learned judge observed : ".... in a taxing statute one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." The observations of Rowlatt J. as above stand accepted and approved by the House of Lords in a later decision, in the case of Canadian Eagle Oil Co. Ltd. v. The King [1946] AC 119 ; [1945] 2 All ER 499. Lord Thankerton also in a manner similar in IRC v. Ross and Coulter (Bladnoch Distillery Co. Ltd.) [1948] 1 All ER 616 at page 625 observed : "If the meaning of the provision is reasonably clear, the courts have no jurisdiction to mitigate such harshnes....